The income discussion: Don't be a one-trick pony

When addressing the need for income, the discussion tends to lean towards lifetime versus non-lifetime income (income rider / no income rider). Additionally, an overview of bucket modeling as a potential solution invariably enters the discussion.

Whenever we cover the use of income riders to support a retirement income plan, we acknowledge there are definitely two sides of the coin. The following points are commonly presented:


  • Lifetime income stream that can NEVER be outlived, while providing the look and feel of a pension
  • Pooling of mortality credits
  • Sequence of returns
  • Alternative to traditional fixed income solutions that provide greater returns in a flat interest rate environment
  • Protection from downside losses


  • There is typically a fee associated to an income rider
  • The fee can cause drag on the account value in negative or zero interest years
  • Should a client's income needs change, it becomes difficult to move the asset
  • Becomes a “dead” asset in your book

THE BUCKET MODEL Are you familiar with the bucket planning model and how to utilize multiple solutions to address income needs? Bucket modeling includes: laddering annuity solutions with and without guaranteed income riders, use of index universal life policies for additional control and tax benefits, LTC components that help avoid exhausting the portfolio in later years, and more. In our experience, the use of the bucket planning concept provides greater control, flexibility and income for your clients.

We've found that income planning is not a one-size-fits-all scenario, however, many advisors position FIAs with lifetime income benefits as the solution for income planning. The idea of providing only one solution for income needs will leave you in the dust as others implement a comprehensive income planning platform. Contact me today at (866) 866-7050 ext. 1105 or to discuss your income planning strategies/methods and how to create a successful income bucket modeling solutions.